Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 69

MetroKlean LLC, a hazardous waste soil cleaning company, borrowed $2.5 million for 5 years to finance start-up costs for a new project involving site reclamation. The company expects to earn a real rate of return of 20% per year. The average inflation rate is 5% per year.
a) Determine the capital recovery required each year with inflation considered.
b) Determine the capital recovery if the company is satisfied with accumulating $2.5 million at the end of the 5 years with inflation considered.
c) Determine the capital recovery in part b) without considering inflation.